8x8 Inc

Good afternoon. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the 8x8 Inc. Fiscal First Quarter 2022 Earnings Conference Call. I will now turn the call over to Jennifer Graham-Clary for the introduction.

Thank you. Good afternoon. Today's agenda will include a review of our first quarter results with Dave Sipes, Chief Executive Officer, and Samuel Wilson, Chief Financial Officer. Following our prepared remarks, there will be a question and answer session. Before we get started, just a reminder that our discussion today includes forward-looking statements about 8x8's future financial performance, as well as its business, product, and growth strategies, including the impact of the COVID-19 pandemic. We caution you not to put undue reliance on these forward-looking statements, as they may involve risks and uncertainties that may cause actual results to vary materially from forward-looking statements, as described in our risk factors in our report filed with the FCC. Any forward-looking statements made on this call and presentation slides reflect our analysis as of today, and we have no plans or obligation to update them. Certain financial measures that will be discussed on this call, together with year-over-year comparisons in some cases, were not prepared in accordance with the U.S. generally accepted accounting principles, or GAAP. A reconciliation of those non-GAAP measures to the closest comparable GAAP measures is provided with our earnings press release and earnings presentation slides, which are available on 8x8's investor relation website at investors.8x8.com. With that, I will now turn the call over to our CEO, Dave Sykes.

Good afternoon, everyone, and thank you for joining us today. Our first quarter results exceeded expectations with both service revenue and total revenue growing above the high end of our guidance range at 21% and 22% year-over-year, respectfully. Key drivers of growth were strong demand for our integrated UCAS and CCAS offerings, continued upmarket focus on the enterprise, channel execution, and our CPaaS business. We are driving operational excellence throughout our organization and culture that is committed to a CPT mindset, customer first, product first, team first. We strengthened our cash position and improved operating profitability on a non-GAAP basis. Last quarter, we laid out our vision for the next three to five years and listed four major focus areas for fiscal year 22. One, expanding our platform advantage. Two, winning together with partners. Three, driving operational excellence. Four, expanding the base. I would like to use these as a framework for today's update. First, we're working aggressively to expand our platform advantage, specifically at the intersection of UCAS and CCAS, focusing our R&D investments to enhance the enterprise-grade elements of our contact center, and maximize the intersection and unique use cases between UCAS and CCAS. During the quarter, we launched the following products and updates. Capitalizing on the demand for integrated UCAS, CCAS, and CPAS offerings, we launched XCAS, Experience Communications as a Service, for customer and employee engagement. This solution advances the cloud communications industry by breaking down the silos between UCaaS and CCaaS to optimize the employee and customer experience. We are receiving broad recognition from industry analysts, channel partners, and customers for fulfilling this need as organizations move to the cloud at a rapid clip. Recent competitor announcements validate this vision and highlights our strong leadership position with XCAS. We are very proud to be delivering today what others are only now envisioning for the future. Customers have also embraced XCAS, resulting in now a third of 8x8's ARR and growing over 30% year over year. Let me highlight a few recent examples. Wren Kitchen, A privately owned British designer, manufacturer, and retailer of kitchens with 91 stores nationwide chose 8x8 XCAS to replace their legacy on-premise systems. They will deploy more than 4,000 employees, including 400 contact center agents, and will use analytics and reporting capabilities to gain deeper insights to ensure an optimal customer experience and support rapid business growth. Additionally, one of the oldest and largest privately held construction companies in the U.S., JSJ, selected 8x8 XCAS to gain better operational visibility across eight entities and 200 locations. The integrated CCAS and UCAS solution will support more than 1,600 employees, fully integrated with their Compass and Salesforce software platforms, and use speech analytics and quality management to drive improvements in customer experience and to help upskill their agents. Public and government sector was a bright spot growing globally. In the U.S., we won Cochise, a public community college in Arizona with over 10,000 students. They needed to replace an aging, failing on-premise communication system and selected 8x8 UCAS for its ease of use, flexibility and call handling capabilities to support more than 500 employees. Also in the U.S., we won Central Unified School District, which serves more than 15,000 K-12 students in Fresno, California. They need a more reliable communication solution with a lower total cost of ownership. After a thorough review process and a 30-day proof of concept, they selected 8x8 UCAS, to support more than 1,500 employees across 24 schools. In the UK public sector, we're experiencing strong referenceability and word-of-mouth referral, further solidifying our leadership position. Key wins there include Police, Fire, and Crime Commissioner for Essex, which provides policing, fire, and rescue services for the County of Essex in the east of England. and supports 1.8 million citizens. The Essex County Fire and Rescue Service selected 8xUCAS and 8xVOIDS from Microsoft Teams to improve their communication capabilities across 50 fire stations and more than 1,400 members of staff. Additionally, Kent and Medway NHS and Social Care Partnership Trust, an NHS provider of secondary mental health care, selected 8xXCAS for 3,200 seats to improve patient safety and experience. 8x8xCAS will integrate with key ICT platforms, provide cost efficiency improvements year on year, enhance security compliance, and enable a work from anywhere experience for staff. Our CPaaS portfolio of APIs and embeddable applications performed strongly in Q1. The focus strategy to extend leadership in Southeast Asia is already paying dividends. We recently announced that Coca-Cola, Euro Pacific Partners Indonesia, is using the 8x8 CPaaS SMS API to provide more than 460,000 large and small retail outlets with a secure mobile experience for managing orders and deliveries. Varia, one of Thailand's largest insurance companies, is using the 8x8 CPAS Video Interaction API to enhance customer experience by enabling customer-facing video as part of their mobile claims service. And thirdly, We Care ID is the first medical-based crowdfunding platform in Indonesia built specifically to help patients raise funds for their treatment. They selected the 8x8 CPAS SMS API for one-time password verification and donation notifications. Additionally, Gypsy as a Service, or JAZZ, has grown its developer base by 4x quarter over quarter as customers continue to embed a complete and secure meetings experience into web and mobile applications. We now have over 10,000 developers signed up. Furthermore, we recently released support for 500 active video meeting participants across our entire video meetings platform, including Jazz. Industry analysts are rallying around our vision for XCAS. The market is responding, and we continue to receive recognition for our best-in-class integrated UCAS and CCAS solution. Recently, we were named a leader in both the 2021 Aragon Research Globe for Unified Communications and Collaboration as well as a 2021 Aragon Research Globe for Intelligent Contact Centers. Furthermore, we received Frost and Sullivan's Global Competitive Strategy Leadership Award for Integrated Employee and Customer Experience Management Solutions. Our second major focus area is to make 8x8 the easiest to do business with and win together across channel partner relationships by leveraging our differentiated wholesale and agency billing models and a partner-first strategy. Let me begin with our channel-first strategy and upmarket focus, which delivered strong results. We had a record quarter upmarket with over 820 customers with greater than 100,000 in ARR, a 36% increase year over year. Enterprise was our strongest customer segment of 40% year-over-year and now representing 49% of our ARR. Channel growth was over 35% year-over-year as our momentum continued to build. We formed several key partnerships in Q1. We formed a strategic channel partnership with Sandler Partners, America's fastest-growing master agent and distributor of connectivity and cloud services, providing 8x8 XCAS, to their more than 9,000 technology partners. We also enrolled Callstats into the Genesys app foundry for enabling next-generation WebRTC monitoring. And we enrolled in the AWS solution provider's private offers marketplace. During the quarter, we continued our rapid pace of Teams innovation by adding present synchronization to previously announced capabilities such as SMS, MMS, and fax. This led to significant adoption and larger deal sizes for our Microsoft Teams offering, as well as opportunities to sell additional capabilities such as our 8x8 XCAS contact center solution, a Microsoft certified for Teams contact center solution. Some wins include Infinite Electronics, a leading global supplier of electronic components who sought a single vendor platform with high availability. They selected 8x8 XCAS integrated with Microsoft Teams to provide over 500 employees across the U.S., Mexico, and China with resilient and consistent communications and contact center capabilities. Additionally, a global biopharmaceutical company sought a single vendor communication platform with MS Teams integration. They selected 8x8 XCAS with voice for Microsoft Teams to improve employee and customer experience for 1,200 employees and 30 contact center agents. And we recently announced that a leading provider of supply chain services, Archway Marketing Services, selected 8x8 XCAS and 8x8 Voice for Microsoft Teams to support their technology enhancement initiative after experience issues with their legacy on-premise systems. We quickly deployed the first of their 13 locations in 72 hours, and we will support 750 UCAS and 70 CCAS users. Our third focus area is to drive operational excellence throughout the organization. In this regard, we increased non-GAAP gross margins sequentially from 61.2% to 62.6%. We continue to show financial leverage in our model, growing operating margins and cash from operations. We launched the industry's first and only financially-backed platform-wide five nines, or 99.999%, SLA across an integrated cloud, UCaaS, and CCaaS solution. This sets a new industry benchmark for cloud communications reliability. In reference to org matters, Ken Berryman will be promoted to Chief Sales Officer, effective August 6th, reporting to me, and our Chief Revenue Officer, Steve Seeger, will be leaving the company. Additionally, in the quarter, we hired Colin Carmichael to be the company's first ever CIO. Our fourth focus area is to expand and defend our base. Q1 represented very strong growth with our installed base, which I'm proud to say now exceeds 2 million paid business users. Customers appreciate our ability to mix and match solutions to meet their needs as they move to the cloud. Examples include Buckinghamshire Council, which provides services for around 800,000 citizens in the region. Realize the value of 8x8x gas. Having previously deployed 8x8 UCAS across the organization for 4,500 employees, they have now added 250 CCAS seats to further improve customer experience. Another land and expand win is Calibri Group, which provides learning solutions for millions of licensed professionals. They use 8x8 XCAS to support enhanced customer engagement and the shift to hybrid work for more than 500 employees. including 200 contact center agents. This quarter, Calibri Group extended XCAS, adding speech analytics to capture insight and sentiment on every customer interaction with the ability to review and deliver comprehensive agent evaluations and coaching for voice, chat, SMS, and social interactions. Furthermore, Envent, a high-performance electrical company, continues to add 8x8 XCAS to more locations. They added more XCAS and Microsoft Voice for Teams seats to support employees in the US, Canada, Mexico, and Germany, bringing their total global seat count to nearly 1,600. Additionally, we hired Walt Weisner to be our new Chief Customer Officer. Walt is a seasoned customer care leader in the cloud communications SaaS industry who's responsible for delivering a superior end-to-end experience for 8x8 customers globally. To summarize, the first quarter of fiscal 2022 was a significant step forward in the plan I laid out last quarter. We beat our financial goals and are raising the bar in fiscal year 2022. We are well positioned to further extend our industry leadership with our customer-first, product-first, team-first CPT culture, our integrated platform advantage, and our future growth drivers. Our strategic vision and direction of a unified cloud offering with XCAS is being validated in the marketplace, and we're proud to be delivering today what our competitors are envisioning for the future. Now, I will turn the call over to Sam to cover the finances.